Gouging

It has always been my assumption that my new practice will be as "digital" as possible. No, I am not going into urology, I am talking about computers.

[Waiting for the chuckles to subside]

For at least ten years, I've used a digital EKG and spirometer that integrated with our medical record system, taking the data and storing it as meaningful numbers, not just pictures of squiggly lines (which is how EKG's and spirometry reports appear to most folks). Since this has been obvious from the early EMR days, the interfaces between medical devices and EMR systems has been a given. I never considered any other way of doing these studies, and never considered using them without a robust interface.

Imagine my surprise when I was informed that my EMR manufacturer would charge me $750 to allow it's system to interface with a device from their list of "approved devices." Now, they do "discount" the second interface to $500, and then take a measly $250 for each additional device I want to integrate, so I guess I shouldn't complain. Yet I couldn't walk away from this news without feeling like I had been gouged.

Gouging is the practice of charging extra for someone for something they have no choice but to get. I need a lab interface, and the EMR vendor (not just mine, all of the major EMR vendors do it) charges an interface fee to the lab company, despite the fact that the interface has been done thousands of times and undoubtedly has a very well-worn implementation path. This one doesn't hurt me personally, as it is the lab company (that faceless corporate entity) that must dole out the cash to a third-party to do business with me.

Doing construction in my office, I constantly worry about being gouged. When the original estimate of the cost of construction is again superseded because of an unforeseen problem with the ductwork, I am at the mercy of the builder. Fortunately, I think I found a construction company with integrity. Perhaps I am too ignorant to know I am being overcharged, but I would rather assume better of my builders (who I've grown to like).

Yet thinking about gouging ultimately brings me back to the whole purpose of what I am doing with my new practice, and what drove me away from the health care system everyone is so fond of. If there is anywhere in life where people get gouged or are in constant fear of gouging, it is in health care. Here are some obvious examples:

Prescription drugs are priced at a level that none but the wealthiest can afford to pay. Seriously, if health insurance did not subsidize the price of brand-name drugs, who would ever buy them? The argument has always been that the research needed to develop new drugs is staggeringly high, but that rings hollow when granny hears about the record profits by the drug company who makes the $150/month cholesterol drug she takes. The truth is, the drug companies can gouge because the subsidies enable them to do so (see a previous post on this).

The argument of why prescription drugs cost so much rings even more hollow when one looks at generic drug costs. These companies don't have to do the R&D to develop the drug (although now many of the brand manufacturers also make the generic). Why then does the cost not drop for many drugs when they go generic? The FDA, in limiting generic manufacturers and hence limiting competition, as well as the deals between pharma and the insurance industry, allows gouging to flourish after patent expiration.

Hospitals are famous for charging $10 for a Tylenol tablet. Why? Because the patient has no choice and the insurance company (inexplicably) pays for it.

Then I turn my eyes to my old practice, and what I used to do. There is plenty of gouging going on there as well:

To run the business successfully, we must charge the highest price possible for any given service we offer. We do this because different insurance plans pay different amounts for the same procedure (be it an office visit, a laceration repair, a strep test, or an immunization). The differences are often very large. If we overcharge a given procedure for an insurance plan, they simply pay what we agreed to accept from them and we write off the rest. But we still charge much more than we expect to get from 99 insurance plans if 1 will pay us the high amount. So what happens to people who don't have insurance (or have high-deductible plans)? They get gouged at the rate we don't expect out of the 99 insurance companies. If we discounted them, we'd be breaking contract with the insurance plans (and perhaps committing Medicare fraud).

Another way to run the business successfully is to charge for everything possible associated with a visit. When I saw a child for wellness and immunizations, for example, I billed for the following:

Code for the Well Visit itself

If there are any sick complaints (stuffy nose, etc) I can tack on a sickness charge for some insurance plans.

I can charge for each vaccine administered, as well as an "administration fee" for the nurse giving it.

I can also get paid by many plans for counseling regarding the immunizations and documenting the counseling given.

The end result is a long list of items the patient sees on the bill, most of which are there for the sole purpose of getting everything I can out of the insurance company. While many (including me) would argue that this is just me getting what I deserve from the insurance company, to the patient it looks an awful lot like I am gouging.

I could go on, and the list would be quite long and very damning, but I probably should get to my main point.

As I near the opening date of my new office, I am faced with decisions about what services I am going to offer my patients for their monthly fee. Whatever I feel about the value of what I am offering, a patient's commitment to pay even $30/month comes with the obvious question: what will I get for my money? My initial list included:

Office visits

Office labs

Management of problems over the phone or via online services

My health education site

Access to medical records

A personal health record

Yet these don't convince many people who are basically healthy and want to avoid doctors' offices. They see the reality: it's cheaper to be healthy. Yet they also realize that they don't control this, and so they look for more value. This has been a big part of my mission over the past month: to justify the monthly fee for patients. Here are some additional savings I have found:

I can draw labs in the office and send them to a local lab, which charges me much less to run them. For the 37 tests on the list, the sum total cost for 1 of each is $530, compared to the $3,100 it would cost if the patient went to the lab.

I am negotiating to do the same with radiology tests, having patients pay me directly to get a discounted rate from the radiology facility.

I can do the same with generic drugs, dispensing them at a wholesale price, saving a whole lot over what they would pay at most pharmacies.

Each of these entities pointed out that I could mark-up the price and make a tidy profit on each of these services. This is what most docs do when they bill labs, x-rays, or dispense drugs. But if my goal is to give value to my patients so they feel the monthly fee is justified, these profits would likely hurt me in the end.

And this is when I understood.

Charging the monthly fee puts me in a position where I am no longer motivated to gouge. I am already paid for the month, so now I have to prove value. I have no motivation to bring people to the office for visits they don't need; I can handle them on the phone or online. I don't have to charge for every little thing I do. Heck, I can lose money on things like drugs or labs and still come out ahead. The better value I give to my patients, the happier they are, and the more likely they will continue to pay the monthly fee.

And I don't have to apologize any more for every additional charge. It's a really nice change.

Imagine that: a doctor actually trying to save money for his patients.